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With less than two months left until Kenya's general election, some business owners in the western city of Kisumu are suspending operations out of fear violence could erupt, as it did after the 2007 polls. The move leaves thousands without jobs.

"Before Christmas, our company's director told us to wind up our duties. We thought it was the usual routine where we normally close for the festive season. But this time, things were different since we were paid all our cumulative dues… The company was closing down," George Onyango, an employee at a Kisumu iron and steel company, told IRIN.

Some 2,000 employees could lose their jobs from the company if the closure is permanent. The company's management said they would resume operations after the elections in 2013, but only if the situation remained peaceful.

Onyango says the prospect of being jobless forced him to send his family back to their home village.

Rise of gangs

Fahad Abdullah, who runs a building and construction company, saw his property looted and destroyed after the 2007 election. Fearing a repeat of the violence, he has decided to close his business, leaving 1,200 employees without jobs.

"My family and friends operate a chain of businesses in this town, and already seven of them [employing about 2,300 people] have closed down." "In the previous elections, we witnessed growing hatred for the Asian communities. I don't know why. Perhaps we are seen as intruders here, and we have no choice but to flee in time. My family and friends operate a chain of businesses in this town, and already seven of them [employing about 2,300 people] have closed down," he said.

"The gangs are sponsored by politicians and use Mungiki [a criminal gang found mainly in Central Province and Nairobi] style tactics of [extortion] and intimidation to create fear," provincial police boss Joseph Ole Tito said.

The city was one of the epicentres of post-election violence five years ago, which left some 1,500 people around the country dead and 500,000 more displaced. Kisumu is home to the country's prime minister, Raila Odinga, a presidential candidate in both the 2007 and the upcoming elections.

Uhuru Kenyatta and William Ruto, current candidates on a rival ticket, are among several people accused by the International Criminal Court of committing crimes against humanity during the 2007-08 violence.

Eroding economic gains

Joyce Atieno, a vendor selling food to employees of some of the closing businesses, said she now struggles to feed her family. "My major buyers are employees from the [companies], but they are now closed down. I have no business. In a day, I used to make a profit of US$4. But since the company closed down, I rarely make even $2. If the situation continues, I'll be forced to close down and go to my rural home," she said.

Experts told IRIN that another round of electoral violence - or even the fear of it - could reverse Kenya's recent economic progress.

"We are making good economic progress as a country, but the fear of electoral violence and the possibility it might reoccur are real, and it erodes all the economic gains we have made as a country," Paul Akumu, an economist at Masinde Muliro University, said.

The World Bank projects the East African Community's economic growth rate for 2013 will be 6.1 percent, but says Kenya's will be 5 percent should it experience election violence.

"Historically, Kenya has also been vulnerable to election-related shocks, and there will be increased attention on the conduct of the 2013 elections, given the post-election violence of 2007-08," the World Bank noted in a recent report.

"If violence accompanies the 2013 elections, Kenya's image as a maturing democracy would be tarnished for a long time," added the report.

The police say they are working to maintain order. "We will continue to crack down on the gangs. We arrested several gang members and arraigned them in court," said the police's Ole Tito.